Column: Media, Myths, and the Minimum Wage

WASHINGTON – Right-wingers like to convince themselves that something is true then repeat it ad nauseum hoping that the rest of us will come to believe it as well. Surprisingly, they have had some success with this strategy.

If you pull someone off the street and ask them about the media, they are likely to repeat the hackneyed talking point that there is some sort of liberal bias. This falsehood has been repeated so many times that even members of the media are starting to believe the lie and doubt themselves. As a result they over-correct and try to give equal time to both sides of every issue even if the facts of the matter show that one side is clearly wrong.

A case in point is the current discussion about raising the minimum wage. Every time the issue arises you can count on the supposedly liberal media to trot out some right wing economist to tell you that supply and demand dictate that higher wages will mean fewer jobs. They might even spice that up with some anecdotal “evidence” of some shop owner who says that they can’t afford to pay their teenage workforce any more than they already do.

Such an analysis is a vast oversimplification of the matter. Jobs are not consumer goods. If you want a new TV, but they are too expensive, you can decide to wait until the price comes down. However, if wages aren’t high enough, most people are not in a financial position to wait until they go up before they find work.

To analyze this issue you need to use a macroeconomic outlook, not try to force the labor market, which is incredibly complicated, into a simple microeconomic model. We might not expect the average reporter to be privy to all the inside baseball, economics stuff, so we can forgive them for that. What is inexcusable though, is that there are easily accessible facts out there that show that the right-wing talking points are nothing but fantasy.

South Dakota has not raised its minimum wage in the last 25 years except when forced to by federal legislation. That has happened seven times during that period. Here are the state level stats:

April 1990 – The unemployment rate was 3.7% from March through June. It ticked up briefly and was down to 3.6% a year later.

April 1991 – The unemployment rate was 3.6% from March through May. It ticked up briefly and was down to 3.5% a year later.

October 1996 – The unemployment rate was already falling to 3.4% in September. It held steady at 3.3% until December and was down to 3% a year later.

September 1997 – The unemployment rate fell from 3.1% in August. It held steady at 3% until December, ticked up briefly and was again at 3% a year later.

July 2007 – The unemployment rate was steady at 2.7% from June through September. It fell to 2.6% before the Great Recession hit, raising unemployment dramatically. It had gone up to 3.1% a year later.

July 2008 – The unemployment rate was steadily rising from February. It was 3% in June and rose continuously until peaking at 5.3% the following May. It stood at 5.2% a year later.

July 2009 – The unemployment rate was 5.2% in June, fell and held steady at 5.1% until October. It rose briefly to 5.3%, but stood at 4.9% a year later.

Did you notice any sort of pattern there? Except for the anomaly of the onset of the Great Recession, unemployment was always the same or lower a year later than it was whenever a new minimum wage was instituted.

There is a good explanation for this. It is worth noting that minimum wage increases don’t just put extra money in the paychecks of fast food employees, but also into the hands of the tens of millions of workers who are paid just slightly above minimum wage. Sure there are a few places that will decide to layoff some teenagers, but that is overwhelmed by the additional spending in the economy by those who get to keep their jobs.

These people are the working poor, and every additional cent they make is likely to be spent almost immediately. All the extra money pouring into malls, cinemas and chain restaurants means that the handful of jobs that were lost early on are more than compensated for; hence the lower unemployment rate found a year later.

Right-wing claims about the minimum wage killing jobs are demonstrably false, but the corporate media was so busy trying not to appear biased that they forgot to do their job and just tell you the truth.

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